14.In our 2015 report on the failure of the Hinchingbrooke franchise we concluded that public bodies will not achieve value for money from their contracts until they become more commercially skilled. We recommended that the Department should report back on the steps it was taking to develop the necessary skills within the service. In July 2015, the Government agreed with our recommendation and set out some of these steps, including strengthening its central commercial function to provide guidance and oversight on procurements.
15.However, lessons do not seem to have been learned on improving commercial expertise, as the number of basic errors in this Cambridgeshire and Peterborough procurement shows us. There was still a significant lack of appropriate skills to deliver the contract effectively, as evidenced by the review commissioned by NHS England into the role of the external advisors. The review found that the Cambridgeshire and Peterborough Clinical Commissioning Group (the CCG) engaged several consultants to advise it during the procurement, but there were failures in the way the advice was brought together. Separately, NHS England conducted an internal review and decided to disband the Strategic Projects Team, which had advised the CCG on the procurement, because it was not satisfied with the quality of the team’s work.
16.NHS England acknowledged that its commercial expertise is thinly spread. It told us that it needs to standardise some of its approaches to procurement so people do not have to hire their own external advice to get some of the basics right. But it also recognised that it needs to ramp up its commercial expertise in areas such as negotiating drugs prices with individual pharmaceutical companies. Nevertheless, the CCG is still relying on external consultants to help it turn the organisation around and plans to pay McKinsey approximately £800,000 to do this.
17.Cambridge University Hospitals NHS Foundation Trust and Cambridgeshire and Peterborough NHS Foundation Trust chose to form a limited liability partnership for the contract with the CCG. This arrangement reduced the risk to the two shareholder trusts, neither of which was in a position to become the lead provider. But it also meant that the CCG contracted with a private sector company which did not fall within any health sector oversight arrangements. We asked NHS England who was responsible for the contract, and who Parliament could hold to account. NHS England told us that the statutory boards of the CCG and the two trusts were accountable but did not identify one single accountable officer.
18.The C&AG’s report noted that the regulators and oversight bodies acted in accordance with their statutory roles but ultimately regulatory checks on individual bodies’ risks did not ensure that the contract was viable. We asked why the seven safeguards set out by NHS England had not been in place during the UnitingCare Partnership contract and asked who should have been responsible for checking the resilience of these partnerships and their commissioning and contracting arrangements. NHS England stated that if there are to be more of these kinds of arrangements, the NHS will have to evolve the way it works nationally, as well as putting in safeguards locally. This will include ensuring that NHS Improvement is clear about the extent to which a limited liability partnership should be regulated itself, rather than as the two statutory bodies that form it, and that the Care Quality Commission is clear on its role. NHS England told us that it and NHS Improvement will create a joint assurance process to start to address this. In the meantime NHS England has already reviewed some procurements taking place in other parts of the country either to stop them altogether or to amend their approach.
19.Under its sustainability and transformation plans, the CCG told us that it still intends to put in place the same model of care in place as had been specified in the contract that collapsed. It said that patients had really endorsed the model and that there had been concern from patients and the public since the contract collapsed that the model would be lost; the CCG’s commitment is that it would not be lost. It further explained that a huge effort with patients and the public went into designing the model and “It is the one thing that we definitely need to keep from this.” We asked the CCG who was accountable, given that sustainability and transformation plans rely on agreement from local health sector organisations. The CCG stated that it and its partners would focus on what gets the right outcomes for patients and what gets the best use of all resources, both financial and staff resources.
40 Committee of Public Accounts, Forty-sixth Report of Session 2014–15, HC 971, March 2015 An update on Hinchingbrooke Health Care NHS Trust
41 HM Treasury: , Cm 9091, July 2015, paras 5.1 and 5.5
42 , PricewaterhouseCoopers, September 2016
46 ; , summary paras 4 and 18
47 , para 21
14 November 2016